[Federal Register Volume 63, Number 211 (Monday, November 2, 1998)]
[Notices]
[Pages 58797-58801]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29200]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 35-26932]
Filings Under the Public Utility Holding Company Act of 1935, as
Amended (``Act'')
October 23, 1998.
Notice is hereby giving that the following filing(s) has/have been
made with the Commission pursuant to provisions of the Act and rules
promulgated under the Act. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the
proposed transaction(s) and any amendment is/are available for public
inspection through the Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should summit their views in
writing by November 17, 1998, to the Secretary, Securities and Exchange
Commission, Washington, DC 20549, and serve a copy on the relevant
applicant(s) and/or declarants(s) at the address(es) specified below.
Proof of service (by affidavit or, in case of an attorney at law, by
certificate) should be filed with the request. Any request for hearing
should identify specifically the issues of fact or law that are
disputed. A person who so requests will be notified of any hearing, if
ordered, and will receive a copy of any notice or issued in the matter.
After November 17, 1998, the application(s) and/or declaration(s), as
filed or as amended may be granted and/or permitted to become
effective.
IES Utilities, Inc. (70-9375)
IES Utilities, Inc. (``IES''), doing business as Alliant Utilities,
Alliant Tower, Cedar Rapids, Iowa 52401, an electric utility subsidiary
company of Interstate Energy Corporation, a registered holding company,
has filed an application-declaration under sections 6(a), 7, 9(a), 10,
and 12(c) of the Act and rules 42 and 54 under the Act.
IES proposed, from time to time through December 31, 2000, to: (1)
issue and sell one or more series of one or a combination of the
following securities--(a) trust bonds (``Trust Bonds''), (b) senior
unsecured debentures (``Senior Debentures''), and (c) unsecured
subordinated debt securities (``Subordinated Debentures''); and (2)
enter into an agreement or agreements (``Agreement'') for the issuance
and sale of one or more series of tax-exempt bonds (``Tax-Exempt
Bonds'') for the financing or refinancing of certain air and water
pollution control facilities and sewage and solid waste disposal
facilities (``Facilities''). As security for IPC's obligations under
the Agreement or security or credit enhancement for the Tax-Exempt
Bonds, IES also proposes, through December 30, 2000, one or a
combination of the following transactions: (1) issuance of a non-
negotiable promissory note (``Note'') to evidence a loan to IES of the
proceeds of the Tax-Exempt Bonds from the issuer of the Tax-Exempt
Bonds; (2) conveyance of a subordinated security interest in the
Facilities or other property of IES as security for IES's obligations
under the Agreement and
[[Page 58798]]
the Note; (3) issuance and pledge of one or more new series of Trust
Bonds as collateral for the Tax-Exempt Bonds (``Tax-Exempt Collateral
Bonds''); (4) acquisition of a letter of credit and execution of a
reimbursement agreement to secure this letter of credit guaranteeing
payment of the Tax-Exempt Bonds; (5) acquisition of an insurance policy
guaranteeing the payment of the Tax-Exempt Bonds; and (6) guarantee of
the payment of principal, premium, if any, and interest on the Tax-
Exempt Bonds.
The aggregate principal amount of the Trust Bonds, Senior
Debentures, Subordinated Debentures, and Tax-Exempt Bonds shall not
exceed $200 million. This amount excludes the principal amount of the
Tax-Exempt Collateral Bonds and any other forms of security or credit
enhancement related to the Tax-Exempt Bonds. The aggregate principal
amount of the Tax-Exempt Collateral Bonds shall not exceed an amount
equal to the sum of the principal amount, plus interest, of the Tax-
Exempt Bonds.
The Trust Bonds will be issued under EIS's Indenture of Mortgage
and Deed of Thrust, dated September 1, 1993, to the First National Bank
of Chicago, as trustee (``Trustee'') as amended and supplemented and as
proposed to be further supplemented for one or more new series of Trust
Bonds (``1993 Indenture''). The Senior Debentures will be issued under
IES's Indenture (For Senior Unsecured Debt Securities), dated August 1,
1997, to the Trustee, as amended and supplemented and as proposed to be
further supplemented for one or more new series of Senior Debentures.
The Subordinated Debentures will be issued under IES's Indenture (For
Unsecured Subordinated Debit Securities), dated as of December 1, 1995,
to the Trustee, as amended and supplemented and as proposed to be
further supplemented for one or more new series of Subordinated
Debentures (``1995 Indenture'').
The Trust Bonds will be secured primarily by: (1) first mortgage
bonds issued under IES's Indenture of Mortgage and Deed of Trust, dated
August 1, 1940, as amended and supplemented (``1940 Indenture''), to
The First National Bank of Chicago, as trustee, and delivered to the
trustee under the 1993 Indenture; (2) first mortgage bonds issued under
IES's Indenture or Deed of Trust, dated February 1, 1923, as amended
and supplemented (``1923 Indenture''), to The Northern Trust Company
(The First National Bank of Chicago, successor) and Harold H. Rockwell
(Richard D. Manella, successor), as trustees, and delivered to the
trustee under the 1993 Indenture; and (3) the lien of the 1993
Indenture on IES's properties used in the generation, purchase,
transmission, distribution or sale of electric energy by IES, or in the
manufacture of manufactured gas, or in the purchase, transportation,
distribution or sale of steam and hot water, which lien is junior to
the liens of the 1940 Indenture and the 1923 Indenture. The Senior
Debentures will be unsecured obligations of IES and will rank on a
parity with all other unsecured and unsubordinated debt of IES. The
Subordinated Debentures will be unsecured, subordinated obligations of
IES. The 1995 Indenture provides that payment of the principal of,
premium, if any, and interest on Subordinated Debentures is
subordinated and subject in right of payment to the prior payment in
full of all senior indebtedness of IES.
Each new series of Trust Bonds and each series of Senior Debentures
and Subordinated Debentures will be sold at the price, bear interest at
the rate or rates, and mature on the date or dates determined at the
time of sale or when the agreement to sell is entered into, as the case
may be. No series of Trust Bonds will be issued at rates in excess of
the lower of 15% per annum or those rates generally obtainable at the
time of pricing for sales of mortgage bonds having the same reasonably
similar maturities, issued by companies of the same or reasonably
comparable credit quality and having reasonably similar terms,
conditions and features (``Ceiling Rate''). None of any series of
Senior Debentures or Subordinated Debentures will be sold if their
fixed interest rate or initial adjustable interest rate exceeds the
Ceiling Rate.
As to each series of Trust Bonds, Senior Debentures, and
Subordinated Debentures having an adjustable interest rate, the initial
interest rate will be negotiated among IES and the purchasers and will
be based upon the current market rate for comparable securities.
Thereafter, the interest rate on these Trust Bonds, Senior Debentures,
and Subordinated Debentures will be adjusted according to a pre-
established formula or method of determination (in each case,
``Floating Rate Trust Bonds,'' ``Floating Rate Senior Debentures,'' and
``Floating Rate Subordinated Debentures,'' respectively), or will be
that rate which, when set, would be sufficient to remarket the Trust
Bonds, Senior Debentures, and Subordinated Debentures at their
principal amount (in each case, ``Remarketed Trust Bonds,''
``Remarketed Senior Debentures,'' and ``Remarketed Subordinated
Debentures,'' respectively). After the initial interest rate period,
none of the Floating Rate Trust Bonds, Floating Rate Senior Debentures,
Floating Rate Subordinated Debentures, Remarketed Trust Bonds,
Remarketed Senior Debentures, or Remarketed Subordinated Debentures
will bear an interest rate exceeding 15% per annum.
The price, exclusive of accrued interest, to be paid to IES for
each new series of Trust Bonds, Senior Debentures, and Subordinated
Debentures to be sold at competitive bidding will be within a range (to
be specified by IES to prospective purchasers) of 95% to 105% of the
principal amount of each series of Trust Bonds, Senior Debentures, and
Subordinated Debentures. Each series of Trust Bonds, Senior Debentures,
and Subordinated Debentures will mature not later than 30 years from
the day of issuance.
IES anticipates that the issuance and sale of each series of Trust
Bonds, Senior Debentures, and Subordinated Debentures will be by means
of competitive bidding or negotiated public offering or private
placement with institutional investors in order to secure the
advantages of an advance marketing effort and/or the best available
terms. Each sale of Trust Bonds, Senior Debentures, and Subordinated
Debentures is a separate transaction not contingent upon another sale
of securities.
IES proposes to use the net proceeds derived from the issuance and
sale of Trust Bonds, Senior Debentures, and Subordinated Debentures for
general corporate purposes, including the conduct of its business as a
utility, the repayment of outstanding securities when due, or the
possible redemption, acquisition, or refunding of certain outstanding
securities prior to their stated maturity or due date.
IES also proposes to enter into one or more Agreements, which may
be loan or installment sales agreements, relating to the issuance and
sale of Tax-Exempt Bonds for the financing or refinancing of certain
Facilities. Under the Agreement, IES may be loaned the proceeds of the
sale of the Tax-Exempt Bonds, and IES may issue a Note, or the issuer
of the Tax-Exempt Bonds will undertake to purchase and sell the
Facilities to IES. While the actual amount of Tax-Exempt Bonds to be
issued has not yet been determined, this amount will be based upon the
cost of refunding outstanding bonds or the cost of the Facilities. The
Tax-Exempt Bonds will mature not more than 30 years from the first day
of the month in which they are initially issued.
[[Page 58799]]
In order to obtain the benefit of ratings for the Tax-Exempt Bonds
equivalent to the rating of the Trust Bonds outstanding under the 1993
Indenture, which ratings IES has been advised may be attained, IES may
determine to secure its obligations under the Note and the Agreement by
delivering to the trustee, a series of Tax-Exempt Collateral Bonds in
principal amount either (1) equal to the principal amount of the Tax-
Exempt Bonds or (2) equal to the sum of the principal amount of the
Tax-Exempt Bonds plus interest payments thereon for a specified period.
The series Tax-Exempt Collateral Bonds will be issued under an
indenture supplemental to the 1993 Indenture (``Supplemental
Indenture''), will mature on the maturity date of the Tax-Exempt Bonds
and will be non-transferable by the trustee. The Tax-Exempt Collateral
Bonds, in the case of clause (1) above, will bear interest at a rate or
rates equal to the interest rate or rates to be borne by the related
Tax-Exempt Bonds and, in the case of clause (2) above, would be non-
interest bearing.
The Supplemental Indenture will provide, however, that the
obligation of IES to make payments with respect to the Tax-Exempt
Collateral Bonds will be satisfied to the extent that payments are made
under the Note or the Agreement sufficient to meet payments when due in
respect of the related Tax-Exempt Bonds. The Supplemental Indenture
will provide that, upon acceleration by the trustee of the principal
amount of all related outstanding Tax-Exempt Bonds under the trust
indenture, the trustee may demand the mandatory redemption of the
related Tax-Exempt Collateral Bonds then held by it as collateral at a
redemption price equal to the principal amount thereof plus accrued
interest, if any, to the date fixed for redemption. The Supplemental
Indenture may also provide that, upon the optional redemption of the
Tax-Exempt Bonds, in whole or in part, a related principal amount of
the Tax-Exempt Collateral Bonds will be redeemed at the redemption
price of the Tax-Exempt Bonds.
In the case of interest bearing Tax-Exempt Collateral Bonds,
because interest accrues in respect of the Tax-Exempt Collateral Bonds
until satisfied by payments under the Note or the Agreement, ``annual
interest charges'' in respect of the Tax-Exempt Collateral Bonds will
be included in computing the ``interest earnings requirement'' of the
1993 Indenture which restricts the amount of Trust Bonds which may be
issued and sold to the public in relation to IES's net earnings. In the
case of non-interest bearing Tax-Exempt Collateral Bonds, since no
interest would accrue in respect of the Tax-Exempt Collateral Bonds,
the ``interest earnings requirement'' would be unaffected.
As an alternative to or in conjunction with IES's securing its
obligations through the issuance of the Tax-Exempt Collateral Bonds,
IES may acquire an irrevocable letter of credit or other credit
facility (``Letter of Credit'') of a bank or other financial
institution (``Bank'') and enter into a reimbursement agreement
(``Reimbursement Agreement'') for any payments under the Letter of
Credit. Any borrowing by IES under the Reimbursement Agreement will
have a term of up to ten years and bear interest at a rate not
exceeding: (1) the London Interbank Offered Rate plus up to 2%, (2) the
Bank's certificate of deposit rate plus up to 1\3/4\%, or (3) a rate
not to exceed the prime rate plus 1%.
As a further alternative to, or in conjunction with, securing its
obligations under the Agreement and Notes, IES may acquire a policy of
insurance guaranteeing the payment when due of the principal of and
interest on the series of the Tax-Exempt Bonds. This insurance policy
would extend for the term of the related Tax-Exempt Bonds and would be
non-cancelable by the insurance company for any reason.
In the event that a Letter of Credit or an insurance policy is
issued as an alternative to the issuance of the Tax-Exempt Collateral
Bonds, IES may convey a subordinated security interest in the
Facilities or other property of IES as further security for IES's
obligations under the Agreement and the Note. This subordinated
security interest would be assigned to the trustee. IES also proposes
to guarantee the payment of the principal of, premium, if any, and
interest on the Tax-Exempt Bonds.
Unless otherwise specifically stated in IES's proposal, any Tax-
Exempt Collateral Bonds, Letter of Credit or any related subordinated
security interest, coverage under any insurance policy, or guarantee
acquired by or issued by IES as a security or credit enhancement for
the Tax-Exempt Bonds shall be in an aggregate amount no greater than
the principal amount of the Tax-Exempt Bonds plus interest and will be
designed to reflect the payment terms and conditions of the Tax-Exempt
Bonds.
It is contemplated that the Tax-Exempt Bonds will be sold under
arrangements with one or more purchasers, placement agents or
underwriters. In accordance with applicable state laws, the interest
rate to be borne by the Tax-Exempt Bonds will be approved by the issuer
and will be either a fixed rate, which fixed rate may be convertible to
a rate which will fluctuate in accordance with a specified prime or
base rate or rates or may be determined by certain remarketing or
auction procedures, or a fluctuating rate, which fluctuating rate may
be convertible to a fixed rate.
IES also proposes that it may enter into arrangements providing for
the delayed or future delivery of Tax-Exempt Bonds to one or more
purchasers or underwriters. The obligations of the purchasers or
underwriters to purchase Tax-Exempt Bonds under any of these
arrangements may be secured by U.S. Treasury securities, letters of
credit, or other collateral. The effective cost to IES of any series of
the Tax-Exempt Bonds will not exceed the yield on U.S. Treasury
securities having a maturity comparable to that of the series of Tax-
Exempt Bonds. This effective costs will reflect the applicable interest
rate or rates and any underwriters' discount or commission.
The premium (if any) payable upon the redemption of any Tax-Exempt
Bonds at the option of IES will not exceed the greater (1) 5% of the
principal amount of the Tax-Exempt Bonds so to be redeemed, or (2) a
percentage of the principal amount equal to the rate of interest per
annum borne by the Tax-Exempt Bonds.
The purchase price payable by or on behalf of IES is respect of
Tax-Exempt Bonds tendered for purchase at the option of the holders
will not exceed 100% of the principal amount, plus accrued interest to
the purchase date.
Interstate Power Company (70-9377)
Interstate Power Company (``IPC''), 1000 Main Street, P.O. Box 769,
Dubuque, Iowa 52004-7691, an electric utility subsidiary company of
Interstate Energy Corporation, a registered holding company, has filed
an application-declaration under sections 6(a), 7, 9(a), 10, and 12(c)
of the Act and rules 42 and 54 under the Act.
IPC proposes, from time to time through December 31, 2000, to: (1)
issue and sell one or more series of one or a combination of the
following securities--(a) first mortgage bonds (``First Mortgage
Bonds''), (b) senior unsecured debentures (``Senior Debentures''), and
(c) unsecured subordinated debt securities (``Subordinated
Debentures''); and (2) enter into an agreement or agreements
(``Agreement'') for the issuance and sale of one or more series of tax-
exempt bonds (``Tax-Exempt Bonds'') for the
[[Page 58800]]
financing or refinancing of certain air and water pollution control
facilities and sewage and solid waste disposal facilities
(``Facilities''). As security for IPC's obligations under the Agreement
or security or credit enhancement for the payment of the Tax-Exempt
Bonds, IPC also proposes, through December 30, 2000, one or a
combination of the following transactions: (1) issuance of a non-
negotiable promissory note (``Note'') to evidence a loan of the
proceeds of the Tax-Exempt Bonds from the issuer of the Tax-Exempt
Bonds to IPC; (2) conveyance of a subordinated security interest in the
Facilities or other property of IPC as security for IPC's obligations
under the Agreement and the Note; (3) issuance and pledge of one or
more new series of First Mortgage Bonds (``Tax-Exempt Collateral
Bonds'') as collateral for the Tax-Exempt Bonds; (4) acquisition of a
letter of credit and executive of a reimbursement agreement to secure
this letter of credit to guarantee payment of the Tax-Exempt Bonds; (5)
acquisition of an insurance policy to guarantee payment of the Tax-
Exempt Bonds; and/or (6) guarantee the payment of principal, premium,
if any, and interest on the Tax-Exempt Bonds.
The aggregate principal amount of the First Mortgage Bonds, Senior
Debentures, Subordinated Debentures, and Tax-Exempt Bonds shall not
exceed $80 million. This amount excludes the principal amount of the
Tax-Exempt Collateral Bonds and any other forms of security and credit
enhancement related to the Tax-Exempt Bonds, including letters of
credit and any related subordinated security interests, guarantees and
insurance policies. The aggregate principal amount of the Tax-Exempt
Collateral Bonds shall not exceed an amount equal to the sum of the
principal amount of the Tax-Exempt Bonds plus interest.
The new series of First Mortgage Bonds will be issued under IPC's
Indenture, dated as of January 1, 1948, to The Chase Manhattan Bank and
C.J. Heinzelmann, as trustees, as supplemented and as proposed to be
further supplemented for one or more new series of First Mortgage Bonds
(``Mortgage''). The First Mortgage Bonds would be issued on the basis
of unfunded net property additions and/or previously retired bonds, as
permitted and authorized by the Mortgage. The Senior Debentures will be
issued under IPC's Indenture (For Senior Unsecured Debt Securities) to
The First National Bank of Chicago (or to another institution), as
trustee, as proposed to be supplemented for one or more new series of
Senior Debentures. The Subordinated Debentures will be issued under
IPC's Indebenture (For Unsecured Subordinated Debt Securities) to The
First National Bank of Chicago (or to another institution), as trustee,
as proposed to be supplemented for one or more new series of
Subordinated Debentures.
The First Mortgage Bonds will be issued on the basis of unfunded
net property additions and/or previously retired bonds, as permitted
and authorized by the Mortgage. The Senior Debentures will be unsecured
obligations of IPC and will rank on a parity with all other unsecured
and unsubordinated debt of IPC. The Subordinated Debentures will be
unsecured, subordinated obligations of IPC. The indenture for the
Subordinated Debentures will provide that payment of the principal of,
premium, if any, and interest on Subordinated Debentures will be
subordinated and subject in right of payment to the prior payment in
full of all senior indebtedness of IPC.
Each new series of First Mortgage Bonds and each series of Senior
Debentures and Subordinated Debentures will be sold at the price, bear
interest at the rate or rates, and mature on the date or dates
determined at the time of sale or when the agreement to sell is entered
into, as the case may be. No series of First Mortgage Bonds will be
issued at rates in excess of the lower of 15% per annum or those rates
generally obtainable at the time of pricing for sales of mortgage bonds
having the same or reasonably similar maturities, issued by companies
of the same or reasonably comparable credit quality and having
reasonably similar terms, conditions and features (``Ceiling Rate'').
None of any series of Senior Debentures or Subordinated Debentures will
be sold if their fixed interest rate or initial adjustable interest
rate exceeds the Ceiling Rate.
As to each series of First Mortgage Bonds, Senior Debentures, and
Subordinated Debentures having an adjustable interest rate, the initial
interest rate will be negotiated among IPC and the purchasers and will
be based upon the current market rate for comparable securities.
Thereafter, the interest rate on these First Mortgage Bonds, Senior
Debentures, and Subordinated Debentures will be adjusted according to a
pre-established formula or method of determination (in each case,
``Floating Rate First Mortgage Bonds,'' ``Floating Rate Senior
Debentures,'' and ``Floating Rate Subordinated Debentures,''
respectively) or will be that rate which, when set, would be sufficient
to remarket the First Mortgage Bonds, Senior Debentures, and
Subordinated Debentures at their principal amount (in each case,
``Remarketed First Mortgage Bonds,'' ``Remarketed Senior Debentures,''
and ``Remarketed Subordinated Debentures,'' respectively). After the
initial interest rate period, none of the Floating Rate First Mortgage
Bonds, Floating Rate Senior Debentures, Floating Rate Subordinated
Debentures, Remarketed First Mortgage Bonds, Remarketed Senior
Debentures, or Remarketed Subordinated Debentures will bear an interest
rate exceeding 15% per annum.
The price, exclusive of accrued interest, to be paid to IPC for
each new series of First Mortgage Bonds, Senior Debentures, and
Subordinated Debentures to be sold at competitive bidding will be
within a range (to be specified by IPC to prospective purchasers) of
95% to 105% of the principal amount of each series of First Mortgage
Bonds, Senior Debentures, and Subordinated Debentures. Each series of
First Mortgage Bonds will mature not later than 40 years from the day
of issuance. Each series of Senior Debentures and Subordinated
Debentures will mature not later than 30 years from the day of
issuance.
IPC anticipates that the issuance and sale of each series of First
Mortgage Bonds, Senior Debentures and Subordinated Debentures will be
by means of competitive bidding or negotiated public offering or
private placement with institutional investors in order to secure the
advantages of an advance marketing effort and/or the best available
terms. Each sale of First Mortgage Bonds, Senior Debentures and
Subordinated Debentures is a separate transaction not contingent upon
another sale of securities.
IPC proposes to use the net proceeds derived from the issuance and
sale of First Mortgage Bonds, Senior Debentures and Subordinated
Debentures for general corporate purposes, including the conduct of its
business as a utility, the repayment of outstanding securities when
due, or the possible redemption, acquisition, or refunding of certain
outstanding securities prior to their stated maturity or due date.
IPC also proposes to enter into one or more Agreements, which may
be loan or installment sales agreements, relating to the issuance and
sale of Tax-Exempt Bonds for the financing or refinancing of certain
Facilities. Under the Agreement, IPC may be loaned the proceeds of the
sale of the Tax-Exempt Bonds, the IPC may issue a Note, or the issuer
of the Tax-Exempt Bonds will undertake to purchase and sell the
Facilities to IPC. While the actual amount of Tax-Exempt
[[Page 58801]]
Bonds to be issued has not yet been determined, this amount will be
based upon the cost of refunding outstanding bonds or the cost of the
Facilities. The Tax-Exempt Bonds will mature not more than 30 years
from the first day of the month in which they are initially issued.
In order to obtain the benefit of ratings for the Tax-Exempt Bonds
equivalent to the rating of the First Mortgage Bonds outstanding under
the Mortgage, which ratings IPC has been advised may be attained, IPC
may determine to secure its obligations under the Note and the
Agreement by delivering to the trustee a series of Tax-Exempt
Collateral Bonds in principal amount either (1) equal to the principal
amount of the Tax-Exempt Bonds or (2) equal to the sum of the principal
amount of the Tax-Exempt Bonds plus interest payments thereon for a
specified period. This series of the Tax-Exempt Collateral Bonds will
be issued under an indenture supplemental to the Mortgage
(``Supplemental Indenture''), will mature on the maturity date of the
Tax-Exempt Bonds and will be non-transferable by the trustee. The Tax-
Exempt Collateral Bonds, in the case of clause (1) above, will bear
interest at a rate or rates equal to the interest rate or rates to be
borne by the related Tax-Exempt Bonds and, in the case of clause (2)
above, would be non-interest bearing.
The Supplemental Indenture will provide, however, that the
obligation of IPC to make payments with respect to the Tax-Exempt
Collateral Bonds will be satisfied to the extent that payments are made
under the Note or the Agreement sufficient to meet payments when due in
respect of the related Tax-Exempt Bonds. The Supplemental Indenture
will provide that, upon acceleration by the trustee of the principal
amount of all related outstanding Tax-Exempt Bonds under the trust
indenture, the trustee may demand the mandatory redemption of the
related Tax-Exempt Collateral Bonds then held by it as collateral at a
redemption price equal to the principal amount thereof plus accrued
interest, if any, to the date fixed for redemption. The Supplemental
Indenture may also provide that, upon the optional redemption of the
Tax-Exempt Bonds, in whole or in part, a related principal amount of
the Tax-Exempt Collateral will be redeemed at the redemption price of
the Tax-Exempt Bonds.
In the case of interest bearing Tax-Exempt Collateral Bonds,
because interest accrues in respect of these Tax-Exempt Collateral
Bonds until satisfied by payments under the Note or the Agreement,
``annual interest charges'' in respect of these Tax-Exempt Collateral
Bonds will be included in computing the ``interest earnings
requirement'' of the Mortgage which restricts the amount of First
Mortgage Bonds which may be issued and sold to the public in relation
to IPC's net earnings. In the case of non-interest bearing Tax-Exempt
Collateral Bonds, since no interest would accrue in respect of these
Tax-Exempt Collateral Bonds, the ``interest earnings requirement''
would be unaffected.
As an alternative to on in conjunction with IPC's securing its
obligation through the issuance of the Tax-Exempt Collateral Bonds, IPC
may acquire an irrevocable letter of credit or other credit facility
(``Letter of Credit'') of a bank or other financial institution
(``Bank'') and enter into a reimbursement agreement (``Reimbursement
Agreement'') for any payments under the Letter of Credit. Any borrowing
by IPC under the Reimbursement Agreement will have a term of up to ten
years and bear interest at a rate not exceeding: (1) the London
Interbank Offered Rate plus up to 2%, (2) the Bank's certificate of
deposit rate plus up to 1-\3/4\%, or (3) a rate not to exceed the prime
rate plus 1%.
As a further alternative to, or in conjunction with, securing its
obligation under the Agreement and Note, IPC may acquire a policy of
insurance guaranteeing the payment when due of the principal of and
interest on the series of the Tax-Exempt Bonds. This insurance policy
would extent for the term of the related Tax-Exempt Bonds and would be
non-cancelable by the insurance company for any reason.
In the event that a Letter of Credit or an insurance policy is
issued as an alternative to the issuance of the Tax-Exempt Collateral
Bonds, IPC may convey a subordinated security interest in the
Facilities or other property of IPC as further security for IPC's
obligations under the Agreement and the Note. This subordinated
security interest would be assigned to the trustee. IPC also proposes
to guarantee the payment of the principal of, premium, if any, and
interest on the Tax-Exempt Bonds.
Unless otherwise specifically stated in IPC's proposal, any Tax-
Exempt Collateral Bonds, Letter of Credit or any related subordinated
security interest, coverage under any insurance policy, or guarantee
acquired by or issued by IPC as security or credit enhancement for the
Tax-Exempt Bonds shall be in an aggregate amount no greater than the
principal of the Tax-Exempt Bonds plus interest and will be designed to
reflect the payment terms and conditions of the Tax-Exempt Bonds.
It is contemplated that the Tax-Exempt Bonds will be sold under
arrangements with one or more purchasers, placement agents or
underwriters. In accordance with applicable state laws, the interest
rate to be borne by the Tax-Exempt Bonds will be approved by the issuer
and will be either a fixed rate, which fixed rate may be convertible to
a rate which will fluctuate in accordance with a specified prime or
base rate or rates or may be determined by certain remarketing or
auction procedures, or a fluctuating rate, which fluctuating rate may
be convertible to a fixed rate.
IPC also proposes that it may enter into arrangements providing for
the delayed or future delivery of Tax-Exempt Bonds to one or more
purchasers or underwriters. The obligations of the purchasers or
underwriters to purchase Tax-Exempt Bonds under any of these
arrangements may be secured by U.S. Treasury securities, letters of
credit, or other collateral. The effective cost to IPC of any series of
the Tax-Exempt Bonds will not exceed the yield on U.S. Treasury
securities having a maturity comparable to that of the series of Tax-
Exempt Bonds. The effective cost will reflect the applicable interest
rate or rates and any underwriters' discount or commission.
The premium (if any) payable upon the redemption of any Tax-Exempt
Bonds at the option of IPC will not exceed the greater of (1) 5% of the
principal amount of the Tax-Exempt Bonds so to be redeemed, or (2) a
percentage of the principal amount equal to the rate of interest per
annum borne by the Tax-Exempt Bonds.
The purchase price payable by or on behalf of IPC in respect of
Tax-Exempt Bonds tendered for purchase at the option of the holders
thereof will not exceed 100% of the principal amount thereof, plus
accrued interest to the purchase date.
For the Commission, by the Division of Investment Management,
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-29200 Filed 10-30-98; 8:45 am]
BILLING CODE 8010-01-M
